India’s Supreme Court has ruled that if money is involved, it will be seen as the main factor in deciding whether an activity is considered gambling.
“Betting on games of skill is posing a serious threat to the state and the well-being of the masses. Such betting would not enjoy immunity merely because it is taking place on a game of skill,” the Apex court has noted.
Distinguished from betting and gambling, games of skill have in the past remained legally contentious.
Few would dispute that everyday games like chess or carrom, enjoyed for pleasure by ordinary people, are games of skill. But the debate intensified when innocent prize competitions introduced entry fees and prize pools, and as poker, rummy, horse racing and fantasy sports claimed the same legal status as games of mere skill.
Games of chance (like slot machines) and games of skill have thus occupied governments, gaming companies and courts since 2021, when Tamil Nadu and Karnataka amended local laws, citing a surge in online gaming addiction that had pushed some consumers into unsustainable debt, financial distress and, in cases, even suicide.
Gaming companies challenged those rules in the High Courts of Madras and Karnataka, which judged in favour of the companies calling the ban too broad and remarking that concerns could have been addressed better. The matter then escalated to the Supreme Court, even as the Central government began to work on legislation in parallel.
What has transpired since then is a Central law called Promotion and Regulation of Online Gaming Act 2025, or PROGA. It has been passed by both Houses of Parliament, received assent from the President in August 2025, and came into force on 1 May 2026. Soon after the Supreme Court delivered its verdict, restoring Tamil Nadu and Karnataka’s power as states of the Union to regulate online gaming independently.
PROGA is a law that aims to promote and regulate online gaming in India, including e-sports, educational games and social gaming, while prohibiting online money games.
It will create an Online Gaming Authority of India, a regulatory body headquartered in Delhi that will formulate the rules and keep a check on such games — including games of skill. Tamil Nadu had set up its own such body, the Tamil Nadu Online Gaming Authority, in 2023.
Rapid evolution
Historically, regulated gambling was confined to gaming houses at designated locations, but that position gradually evolved in physical as well as digital spaces.
The Bangalore Turf Club maintains a counter in the city of Mangalore, and Horse Racing Clubs now offer subscriptions for viewing races online. Some are said to have launched digital versions of off-track televised betting (triggered by the pandemic when visitors were not allowed to be present at these places).
Card rooms exist in recreational clubs across the country, where games of skill may be conducted in private. Such confinement to location, however, has been largely limited to private business. Some Indian states sell lottery tickets at dedicated shops, out in the open for everyone to see, even as other states ban sale of those tickets within their territories.
The Constitution permits Central and state-run lotteries under the Union List in the Seventh Schedule, and the state, rather than private entities, conducts and benefits from them. At the same time, a separate entry in the State List makes betting and gambling a subject on which state legislatures have the power to enact laws.
Being a state subject, Goa and Sikkim, and the Union Territory of Daman and Diu, allowed casinos with live gaming to operate in their territories, under local laws. Maharashtra too had a Casino law but it was never brought into force and repealed in 2023.
Sikkim launched the Sikkim Online Gaming (Regulation) Act 2008 which extends to the whole of Sikkim and provides for the control and regulation of online gaming through electronic or non-electronic formats within the state, and to impose a tax on such games (it has a separate act for casinos).
Nagaland has the Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2015, which permitted wagering or betting on online games of skill as long as they were being accessed by players within territories where games of skill are exempted from the ambit of gambling (its status appears to have become uncertain with PROGA’s nationwide, skill-irrelevant ban on online money gaming).
But much has changed since then.
Online games evolved with prize pools across tables with hundreds of tables (or virtual rooms) with varying amounts of pool money, and each table became a tournament by itself. The industry was seen as either too slow or too greedy to self regulate a problem it had created.
A five-member committee set up by the Tamil Nadu government returned with its findings in 2022: “The algorithm for the random generators are known to the developers and hence are pseudo random generators; such games can be played with bots (an autonomous program or character designed to interact with systems or users); no mechanism is available for auditing the centralised server architecture of the gaming systems; and artificial intelligence can be used to manipulate the games and lure the players into continued indulgence”.
Options, futures and derivatives are also financial contracts that tread the fine line of gambling (by placing stakes on an uncertain future price based on skill, with gain/loss determined by that outcome). Except that futures and options are sold and bought under law, and such products are overseen by SEBI (The Securities and Exchange Board of India) and the Reserve Bank of India. A part of stock market investments would also fall under similar definition of skill or gaming. But such transactions are treated differently due to the laws, regulations and regulators around them.
Gaming has had little oversight in India. Notes the Supreme Court: “...the entire process of conducting races and betting was highly regulated and organised, which is very different from the uncertainty and veil of invisibility associated with online gaming activities, whether of skill or of chance”.
Take Goa, for instance. After much delay it appointed its Gaming Commissioner (who will oversee the implementation of rules regarding casinos) in January 2020. But while entry and age restrictions exist in the state, globally prevalent rules like those around payout ratios do not.
The proliferation of smartphones and the rapid expansion of digital gaming vastly expanded the reach of online money gaming as well as the problems associated with it. Thus when the hammer fell, it fell hard.
Gaming company Head Digital Works, the owner of Adda52 which renamed to A23Poker, is said to have challenged PROGA in the Karnataka High Court. It had only recently bought stake in DeltaTech Gaming for ₹491 crore after the company had shown over 15 years of profitable growth. Its product “A23 Rummy” was one of India’s largest platforms at the time boasting a user base of 75 million.
In August 2025, Calirvest, the Toronto-based private equity firm which had significant investment in Head Digital Works, said that it would pursue legal rights to seek relief. By November it had written off its entire investment. “Based on our negative experience with Head Digital Works and other recent experiences investing abroad, we intend to concentrate our investing in North America going forward,” said Ken Rotman, CEO of Clairvest.
With PROGA having come into effect, online money gaming is prohibited by law. The decisive question earlier was whether skill, rather than chance, predominated in each case. The decisive answer now is whether stakes are involved.
Legal clarity is welcome, it having enabled the application of goods and services tax (GST) on such services, with some tax measures being applied retrospectively.
“This would be a favourable outcome for us as the levy of GST would accordingly not be on the amount of gross bet value of all games played during the relevant period (which had the effect of notionally multiplying the revenue and consequently the GST payable on it), but would be on the amount received from players for the chips sold to them,” said casino and hotel company DeltaCorp in a note to investors.
But blanket bans also come with consequences. “In parallel, and as a side effect of the ban, customers simply shifted to offshore gray areas,” according to a Mixi Report India’s State of Play July 2026 report. “Unfortunately, these have much higher risk due to lack of KYC (know your customer), safeguards, and grievance redress mechanisms.”
The market has found stability in pure play gaming.
A Dentsu India Gaming Report 2025 has projected the pure play gaming industry to grow over 20 per cent per year, with a market size of ₹12,500 crore by 2027. “The next phase of growth is not just creating for India. Just as anime and k-pop have reshaped cultural influence for other nations, India’s mythology and folklore can become a multiplier abroad.”